Best Options Trading Platforms

Options trading sometimes get a bad rap as being the realm of wild, “high risk, high reward” trading that is little more than gambling. Options are actually an important financial product, however, that can be used for everything from smoothing out consumer prices over time to generating extra income for your 401k.

Although options can be dangerously risky and wildly complicated, they don’t have to be, and most investors can find options strategies that will fit their portfolio. The first step, though, is finding the best options trading platform for you. With a low-commission options broker, you can generate extra income without losing too much of it to fees and other costs.

Here’s a glance at the best options trading platforms that could be right for you:

What Are Trading Options?

Options are contracts between two parties that allow the person holding the contract to buy or sell something (usually a stock or commodity) at a specific price (known as the “strike price”) at some point in the future. “Put” options allow you to sell something at the strike price, whereas “call” options give you the right to purchase it.

Which Options Trading Broker Is Right for You?

Although it is true that many options strategies are high-risk gambles, you can also deploy them in ways that have clear benefits even for a novice investor.

Even the most risk-averse investor can still find value in using a “protective put” — a put option used to hedge their position in a certain stock — or a “covered call” — selling a call option on shares they already own — to create an additional income stream for their 401k or individual retirement account. So, even if you’ve never traded options before, it might be worthwhile to shop around for the best options trading platform for beginners.

Here’s a deeper look at the best options trading platforms for beginners and experienced traders:

Ally Invest

Best for: Beginners

Cost: $4.95 plus $0.65 per contract

Ally Invest could be a great place to start experimenting with options trading. There are no account minimums, a competitive commission structure, user-friendly platform tools and low minimum trade amounts. So, it’s easier to get started with small trades before making any major commitment. And, if you find success and want to expand your trading, the fees drop to $3.95 plus 50 cents per contract if you make 30 or more trades every three months or have a daily balance of more than $100,000.

Charles Schwab

Best for: Beginners and intermediate-level traders

Cost: $4.95 plus $0.65 per contract

Charles Schwab is right in line with the fairly standard transaction fee of $5 with 65 cents per contract — over half of the brokers in this list charge either $4.95 or $5 per trade. The broker offers a variety of tools and resources to help you learn about options trading and develop your strategy. And once you do, the optionsXpress tool provides specialized support for options trading, third-party research and expert insights.

eOption

If you’re choosing to define the best options trading broker on cost alone, eOption would be your winner with its pricing at $3 plus 15 cents per contract. The broker also offers a range of tools and resources that can help you learn about investing and execute your options trades or set up automatic trades to take advantage of opportunities whether you’re watching at that moment or not.

Merrill Edge

Best for: Experienced options traders

Cost: $6.95 plus $0.75 per contract

Merrill Edge is among the costliest platforms for options trading at nearly $7 a trade and another 75 cents per contract. The company boasts a number of tools to help you maximize the value of your trades, however, including access to independent research from Merrill Lynch, an options strategy builder to help you develop your approach to trading, and powerful screening tools to find the right options for you.

TD Ameritrade

Best for: Infrequent options traders

Cost: $6.95 plus $0.75 per contract

TD Ameritrade — like Merrill Edge — is in the top tier for transaction costs on options trading, meaning you will likely pay more to execute trades on its platform than others. But the company also has no trade minimums. Having a brokerage account with the company means having access to the thinkorswim platform, which advertises a package of elite tools to help you develop and execute trading ideas.

TradeStation

Best for: Experienced options traders

Cost: $5 plus $0.50 per contract

TradeStation offers a robust platform with a variety of tools built by affiliate TradeStation Technologies to help you trade. And although analysis tools like RadarScreen can help you do real-time market scanning for trading opportunities, options traders will likely be most interested in the OptionStation Pro options analysis platform.

Advertiser Disclosure: Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all financial or credit offers available.

We make money easy.

Get email updates to help you make more, save more and live a richer life.